Posted On: March 14, 2006, 5:34 pm CST

Posted By: JR

Where do I start? First of all insurance agents want to sell flood coverage, they get paid commission to do so, if you don't sell it they make no money. Consumers want the coverage, but don't think they need to spend the money on it after they find out how much it costs. Insurance companies are regulated by each state and must file the policy forms for approval, does the Department of insurance have any responsibility in approving forms (all of them) that exclude flood loss? The answer is NO because the departments know that flood is available from NFIP (the fed) to anyone that wants it, at a lower cost than any insurance company would offer it. AND IT IS PASTED ON THE FRONT OF THE HO POLICY. Should banks force people to buy flood insurance for all loans?, it is questionable now if it is legal to force people to buy a federally backed product in high risk zones just to get a loan. The fed is responsible for determining and setting the flood zones, this would allow for a rezoning effort that would put everyone in the high risk zones, I suppose that is one way to make it happen. If flood coverage comes from the fed and homeowners policies exclude it why are we not seeing the NFIP sued or brought into this action or asking them to retroactively offer coverage for the billions in losses. It is impossible for most agents in that area to even produce the signed rejection of coverage since the offices were wiped clean off the earth. If the FED sets the zones and the FED requires flood in high risk areas and the Fed sets the rate for flood and the FED backs the banks with FDIC then ultimately the FED will pay out either in flood claims or banks bailout when the people default on the loans that did not happen to be in high risk areas. A huge area of Mississippi that is coastal and that was flooded was NOT in the high risk zones. 1 bloock off the Gulf of Mexico was not high risk. If anything the FED is guilty of giving some people a false sense that they were not suseptible to flooding and the banks are left holding the bag which means that the fed will bail them out anyway.
Politicians can not be honest and tell the people what is right, they have an innate nature to do what protects their office and do whatever it takes to get re-elected or elected to the next office. If they would just come forth and say the HO policies have never included flood coverage and you had the chance to buy flood coverage or better yet "you should have bought it" then more people would not be stuck waiting and hoping for the jackpot to open up and spill money in their laps. Insurance companies will fold before they pay flood losses even if court ordered. A contract must be enforced or it is no good. Carriers will NOT pay these flood losses under ho polices, no matter what the court decides, and they should not.